Nocturne Labs, a crypto startup dedicated to introducing private accounts to the Ethereum network, has successfully secured $6 million in seed funding. This funding round was jointly led by Bain Capital Crypto and Polychain Capital, with participation from prominent figures such as Ethereum’s co-founder, Vitalik Buterin, along with Bankless Ventures, Hack VC, Robot Ventures, and several others.
Founded in the United States last year, Nocturne Labs is developing a protocol designed to enable users to engage in anonymous transactions within the Ethereum ecosystem. This protocol will create “internal” accounts within Nocturne, allowing users to transact and handle funds in an anonymous manner, breaking the direct link to a single address. Users can deposit and receive payments into their Nocturne accounts, and they can verify their ownership of funds using zero-knowledge proof technologies. This privacy-enhanced functionality will support various activities, including payments, trading, and staking.
While privacy-focused crypto platforms exist, they often suffer from usability and compatibility issues. For example, crypto mixers offer limited user experiences, and other blockchain networks necessitate ecosystem migrations. Nocturne aims to offer the seamless experience of a typical Ethereum account while providing asset privacy to encourage broader adoption.
Nocturne Labs is initially focused on implementing private accounts within the Ethereum ecosystem, with plans to expand to Ethereum Layer 2 networks in the future. The protocol is slated to launch on the Ethereum mainnet in the coming month.
Privacy is considered crucial for the broader adoption of cryptocurrencies, as it enables users to receive income, make purchases, and store assets on the blockchain without disclosing sensitive financial information.
Regarding regulatory concerns, Nocturne Labs is taking a measured approach by implementing a two-step, permissioned deposit process to filter out illicit deposits. This approach, which prioritizes compliance, allows Nocturne to gradually transition to a more permissionless framework in the future.
Vitalik Buterin, who co-authored a research paper on “Privacy Pools,” has a shared vision with Nocturne in striking the right balance between compliance and permissionlessness. Nocturne Labs currently employs fewer than ten individuals, with potential expansion in engineering, growth, and legal/compliance functions anticipated after the mainnet launch.
